DTN Oil Update
Oil Eyes Large Weekly Rise as Iran Peace Prospects Dim
VIENNA (DTN) -- Oil and product futures edged lower Friday morning on reports of imminent U.S.-Iran peace talks after a four-day uptrend that left energy prices on track for large weekly rises amid dimming prospects for a quick end to the Middle East conflict that has caused the largest supply disruption in history.
By 8:35 a.m. EDT, NYMEX WTI crude for June delivery was down $0.46 to $95.39 bbl and ICE Brent for June rose $0.01 to $105.08 bbl. For the week, WTI showed a 13% rise while Brent was up almost 17%.
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Downstream, NYMEX ULSD futures for May delivery slipped by $0.0088 to $3.9794 gallon, and front-month NYMEX RBOB futures dipped by $0.0399 to $3.4222 gallon.
The U.S. Dollar Index retreated by 0.172 points to 98.43 against a basket of foreign currencies.
Oil futures clawed back most of the last two weeks' declines that came on the back of U.S.-Iranian peace talks and a short-lived reopening of the Strait of Hormuz. An Iranian delegation was reportedly headed to Islamabad to resume negotiations with their U.S. counterparts, although recent progress in diplomacy between the two sides had been thin.
While U.S. President Donald Trump on Tuesday, April 21, extended the ongoing ceasefire with Iran, delegations from both countries failed to meet for a second round of direct talks after the U.S. instituted a naval blockade on Iranian maritime trade. Energy exports are a key revenue source for Tehran, which cited the lifting of the U.S. embargo as a precondition for further negotiations.
The White House also announced Friday that the Jones Act that allows allow international tankers to transport energy and agricultural products between U.S. ports will remain in place for another three months, extending its original two-month deadline.
President Trump first announced the 60-day waiver in mid-March to help stabilize energy prices by making domestic fuel shipments via tanker economically more feasible following the effective closure of the Strait of Hormuz after the breakout of the Iran war at end of February. Prior to war-generated blockades, the strait used to be the main waterway for Middle East oil shipments, carrying around 20 million bpd of petroleum liquids that accounted for a fifth of global supply.
The Middle East conflict has seen abrupt pivots of both escalation and calm in its near two months, with Trump announcing Thursday, April 23, that he has ordered the U.S. Navy to "shoot and kill" any vessel seen attempting to lay new mines in the waterway. The president claimed that the United States had complete control over Iran's maritime trade, with U.S. armed forces reporting that 34 vessels had been stopped so far from gaining access to Iranian ports.
Late on Thursday, Trump also said he was putting a three-week window to the ceasefire on Iran, after initially leaving it open indefinitely. That caused oil prices to jump after the close of regular trading hours. He reiterated his threats to attack Iranian energy infrastructure should flows through the Strait of Hormuz not resume, adding "Iran has a matter of days before that takes place."
Iran last weekend briefly allowed the Strait of Hormuz to be used by all vessels after Israel, the U.S. partner in the attacks on Iran, agreed to cease incursions into Lebanon in its war against Iran-aligned Hezbollah for ten days, before blockading traffic once again after the U.S. Navy ceased an Iranian-flagged cargo ship.